What Led to a Rebound in Precious Metals on May 11?

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What Led to a Rebound in Precious Metals on May 11? PART 1 OF 5

What Led to a Rebound in Precious Metals on May 11?

Precious metal rebound

On Thursday, precious metals saw yet another day of recovery as the equities market fell lower. The US and European markets were both trading lower on Thursday, May 11, 2017. Gold futures for July expiration rose about 0.4% to close at $1,224.2 per ounce. Gold is likely consolidating after touching its lowest in eight weeks on Tuesday.

Silver also followed gold and rose about 0.36% closing at $16.3 an ounce. Platinum was up 0.86% to close at $917.2 an ounce. Palladium traded marginally lower by 0.05% and ended at $789.9 per ounce.

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Gold versus equities

The precious metals and stock markets are often known to move away from each other, as equities are famous as risky assets and precious metals as safe-haven assets. As investors’ appetite for risk surges, investors will be more tilted towards equities than gold and silver.

The above chart is a comparison of gold, represented by the SPDR Gold Shares (GLD) versus the SPDR S&P ETF (SPY), which stands for the S&P Index.

The mining shares belong to the equity segment of the market and are more likely to follow precious metals. Metal prices are the major determinant of the profitability of these companies. The mining stocks that rose the most on Thursday include Primero Mining (PPP), B2Gold (BTG), Royal Gold (RGLD), and First Majestic Silver (AG). These four stocks moved 8.8%, 7.5%, 6.8%, and 6.1%, respectively. Combined, these four stocks account for about 7.5% of the VanEck Vectors Gold Miners Fund (GDX).


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